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U.S. Wholesale Inventories Rise Less-Than-Forecast 0.1% as Sales Gain 0.6%

Inventories at U.S. wholesalers rose less than forecast in November as distributors struggled to keep up with demand, a sign gains in manufacturing will keep the economy growing.

The 0.1 percent increase in inventories followed a 1.2 percent revised gain in October, Commerce Department figures showed today in Washington. Economists projected a 0.5 percent rise, according to the median estimate in a Bloomberg News survey. Sales climbed 0.6 percent in November.

Wholesalers kept enough goods on hand to last 1.15 months at the current sales pace, close to the record low of 1.13 months reached in March last year. More spending on holiday items after stockpiles were drawn down in the third quarter may have encouraged manufacturers to boost output as 2011 drew to a close.

“We expect some rebuilding in the fourth quarter, and actually quite a substantial boost” to growth from inventories, Aneta Markowska, a senior U.S. economist at Societe Generale in New York, said before the report. “Demand has been pretty good in the fourth quarter, though the momentum peaked early in the quarter.”

The median projection for wholesale inventories was based on a survey of 29 economists whose estimates ranged from a 0.1 percent decline to a 1 percent gain. The October reading was revised from a previously reported 1.6 percent increase.

Stocks rallied, sending the Standard & Poor’s 500 Index to the highest level in five months, on speculation China may act to spur growth. The S&P 500 advanced 1.1 percent to 1,294.52 at 10:22 a.m. in New York.

Durable Goods

Wholesalers’ stockpiles of durable goods, or those meant to last several years, increased 0.1 percent in November, led by electrical equipment and machinery, today’s report showed. Inventories of automobiles fell 1.7 percent, the biggest drop since April.

The value of unsold non-durable goods inventories increased 0.2 percent as purchases rose 0.3 percent. Stockpiles of petroleum products rose 1.5 percent as sales were little changed.

Gross domestic product climbed at a 1.8 percent annual rate from July through September, Commerce Department figures showed last month. Inventories were cut at a $2 billion annual rate, subtracting 1.35 percentage points from growth. It was the first time stockpiles were trimmed since the last three months of 2009.

Output Boost

Fewer inventories may have led producers to boost output in the final months of 2011.

Toyota Motor Corp. (7203), following last year’s supply-chain disruptions caused by Japan’s March earthquake, is working to rebuild its inventory of autos in the North America market as it sees sales growing.

“We begin 2012 with high expectations, based on a strengthening economy, inventories that are rapidly approaching normal levels, but most of all, an influx of more new and updated products,” Jim Lentz, the Toyota City, Japan-based company’s U.S. sales chief, said on a Jan. 4 conference call.

Wholesalers make up about 30 percent of all business stockpiles. Factory inventories, which comprise about 38 percent of the total, grew 0.5 percent in November, the Commerce Department said Jan. 4. Retail stockpiles, which make up the rest, will be included in the Jan. 12 business inventory report.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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